For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.

I’ll admit it…I’m a bit of a pack rat. After working here for more than 30 years, I’ve accumulated and inherited a lot of stuff—articles, memos, brochures, newsletters, books, and VHS (but no 8-track) tapes. One of my prized possessions is the December 1949 Fortune magazine featuring the article “Big Money in Boston” that inspired Vanguard Founder John C. Bogle to pen his college thesis on the mutual fund industry.

While recently digging through my files, I came across a 40-year-old press release announcing a signal event in Vanguard’s history and good news for clients. On February 9, 1977, Vanguard converted our 14 funds to no-load status. Up to that point, the funds were sold with sales charges of up to 8.5%.

A history of reducing the cost of investing

If you invested $10,000 in Vanguard 500 Index Fund in 1977, you’d pay an $850 commission, plus $40 in annual fund operating expenses. Today, that same investment would cost you just $5 a year in annual operating expenses if you’re invested in Admiral™ or ETF shares.

We eliminated commissions 40 years ago. We’ve reduced our complex-wide average expense ratio from 0.89% in 1975 to 0.18% today. And we recently announced another round of reductions.

Simply put, Vanguard is the industry’s all-the-time, across-the board low-cost leader. The proof is in the pudding: 99% of our mutual funds are in the lowest-cost decile of their respective categories. (Source: Vanguard calculations using asset-weighted fund expense data from Morningstar, Inc.)

Buying below sticker price

You already know that low costs are absolutely critical to long-term investment success, which is likely one of the reasons you invest with us. You’re not only buying at the low-cost fund shop, you’re also being frugal with your fund selections.

Let me explain.

Our complex-wide average expense ratio, which is a straight average, is 0.18%, or $18 for every $10,000 invested.* But on average, Vanguard investors actually pay less than “sticker price.” When Vanguard clients put more investment dollars into lower-cost funds and share classes (such as Admiral, ETF, and Institutional shares), they’re paying an average asset-weighted expense ratio of just 0.12%, or $12 for every $10,000 invested.**

Choosing low-cost funds is a powerful way for you to maximize your investment dollars, but it can’t compare with the impact of boosting your savings rate. Stay tuned.

* The complex-wide average expense ratio of 0.18% is simply a straight average, taking the total of the expense ratios of the various shares of Vanguard’s funds and dividing by the number of fund shares, using data from Lipper, a Thomson Reuters company.

** Asset weighting assigns higher weights to the expenses of the funds with larger assets. For each fund, the expense ratio is multiplied by this weight and, subsequently, its asset-weighted total is summed to obtain the asset-weighted average for a set of funds. (Derived from Morningstar data.)

Note: All investing is subject to risk, including the possible loss of the money you invest.

John Woerth

John leads Vanguard Public Relations Group and serves as a company spokesperson. Since joining Vanguard in 1986, he has served as editor of Vanguard’s quarterly shareholder newsletter, "In The Vanguard," and monthly employee newsletter, "Crew's News." John earned a B.A. and a master's degree in journalism from Temple University.

Comments

Ilene S. | February 22, 2017 5:25 am

Richard G. | February 21, 2017 10:23 am

Mr. Worth having bought several of Mr. Bogle’s books he took at lot of heat from both the industry and his peers when he founded Vanguard.Mr Johnson over at Fidelity was one of the many naysayers. I saw on their web site this week ( I have no money there) that you should come over to Fidelity for all of your index needs.Time and the outstanding results of ever lowering of costs has truly created the eighth wonder of the world! If there ever was a man who had strength of his convictions Mr. Bogle was the greatest of the example! I plan on doing what Vanguard counsels me to do until I am toes up! It is great to be an owner of the best investment company in the world. You all up at the main office are truly walking on financial “hallowed ground”.Congratulations on hitting the 4th TRILLION under management last January! Let’s go get that 5th Trillion!

Paul D. | February 11, 2017 10:44 am

As a Vanguard investor, it is especially rewarding to experience continuously lowered investment costs, an ever expanding array of investment products and world class financial advisory resources, while at the same time, being part of the amazing success story that is Vanguard Group.

Quoting the Wall Street Journal, “January follows a year when Vanguard’s funds pulled in more new money than all it’s competitors combined”. Nothing demonstrates a successful discipline more effectively than outstanding results.

Congratulations on surpassing $4 Trillion in assets this past January. Many thanks to the Captains who charted the course and to the many Crew who navigated the shoals. Wishing you “fair winds and following seas”.

It’s hard for me to imagine a time when the low cost provider was charging 8.5% load on their funds. Amazing how times change. Vanguard has an impressive history of reducing fees. How much lower will the fees get in the next 60 years?

Matt, in 1977, it cost $890 a year to invest in Vanguard 500 Index Fund versus $5 today—a 99.4% reduction in costs. I think you’ll continue to see costs come down, particularly in active management and advice.

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For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.